Inflation in Tokyo stays above BOJ’s target for 13th straight month

TOKYO – Core consumer prices in Japan’s capital rose 3.2 percent in June from a year earlier, exceeding the central bank’s 2 percent target for the 13th straight month in a sign of broadening inflationary pressure, government data showed on Friday.

The data for Tokyo, which is seen as a leading indicator of nationwide trends, will likely keep alive expectations the Bank of Japan (BOJ) will phase out its massive stimulus this year.

The increase in the Tokyo core consumer price index (CPI), which excludes volatile fresh food but includes fuel costs, followed a 3.1- percent gain in May and compared with a median market forecast for a 3.3- percent rise.

An index that strips away both fresh food and fuel costs rose 3.8 percent in June from a year earlier after a 3.9 percent gain in May, the data showed.

Japan’s economy is finally recovering from the scars of the COVID-19 pandemic, though risks of a global slowdown and rising food prices hang over the outlook for exports and consumption.

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With inflation already exceeding its target, markets are rife with speculation the BOJ could soon phase out ultra-loose monetary policy under new governor Kazuo Ueda.

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Ueda has repeatedly said inflation will slow in coming months as cost-push factors dissipate, and that the BOJ will maintain ultra-loose policy until stronger wage growth ensures Japan can sustainably see inflation hit its 2 percent target.

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But he told a seminar on Wednesday the BOJ would see good reason to shift monetary policy if it became “reasonably sure” that inflation would accelerate into 2024 after a period of moderation.